For your situation, it depends. The letter that is referenced to in my above answer Texarkana Tax Exemption (a PDF file) mentions that the exemption is available in either of two situations:
- If you are a Texarkana, AR permanent resident, you are exempt from Arkansas Tax on all sources. You would still need to file an AR return, and file Form AR-TX to show the exemption.
- If you are a Texarkana, TX permanent resident, you are exempt from Arkansas individual income tax on income earned in Texarkana, AR only. Income from anywhere else in AR would still be taxable to AR. The same tax forms mentioned above still apply.
In addition to these provisions, if your income is from Texas, and you are a Texas resident, Arkansas cannot tax you if you are not a resident of Arkansas. Arkansas can only tax you on income earned in Arkansas. (One caveat: you have a residence in Arkansas. If you spend at least 183 days physically present in Arkansas, Arkansas considers you a resident and can tax all of your income. However, if they consider you a resident, your residency is Texarkana, AR, and you fall into exemption #1 above).
However, if you are a TX resident, and not from Texarkana, TX, then Arkansas can tax you on all of your income you earn anywhere in AR, including Texarkana.
Since your situation has some nuance to it, you might want to contact the Arkansas Department of Finance and Administration. Review your situation with them using the PDF document provided, and then you will get a better idea of what you need to do.
Chances are that at a minimum you will need to file the outstanding Arkansas returns. If you qualify to have the income exempted from Arkansas tax, then you will include the corresponding AR-TX forms referenced above. Your tax should go down to zero, and you can request the Department to waive penalties/fees if they still apply.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
